Justia Insurance Law Opinion Summaries

Seventeen-year-old Josiah Wheeler rented a cabin in Tok, Alaska, owned by Deborah Overly and Terry Summers. Wheeler was found dead in the cabin’s bathtub, and an autopsy revealed he died of acute carbon monoxide poisoning. A deputy fire marshal discovered that a propane water heater in the bathroom had an exhaust flue unconnected to any external venting, causing high levels of carbon monoxide to accumulate when the bathroom door was shut. The cabin was covered under a homeowners insurance policy issued by Garrison Property and Casualty Insurance Company, which included a pollution exclusion clause.Wheeler’s estate and his parents sought an out-of-court settlement with the homeowners, who notified Garrison of the claims. Garrison denied coverage, citing the pollution exclusion clause, and refused to defend the homeowners. The homeowners confessed liability and assigned their right to proceed against Garrison to Wheeler’s estate. The estate then filed suit against Garrison in federal district court, seeking damages and a declaratory ruling that the policy provided coverage. The district court granted summary judgment to Garrison, concluding that the pollution exclusion unambiguously barred coverage for carbon monoxide poisoning.The United States Court of Appeals for the Ninth Circuit certified a question to the Supreme Court of Alaska, asking whether the pollution exclusion in the homeowners insurance policy excluded coverage for claims arising from carbon monoxide exposure. The Supreme Court of Alaska concluded that an insured could reasonably expect coverage for injuries resulting from exposure to carbon monoxide from an improperly installed home appliance. The court noted that the policy’s broad definition of “pollutants” and the specific exclusions for lead paint and asbestos suggested a narrower interpretation of the pollution exclusion. Therefore, the court held that the pollution exclusion did not bar coverage for Wheeler’s death. View "The Estate Wheeler v. Garrison Property and Casualty Insurance Company" on Justia Law

Cathy L. Stroud sued Ozark National Life Insurance Company and its agent, Stephen Guinn, for negligent misrepresentation and breach of fiduciary duty after her husband, Alan Stroud, converted his term life insurance policy to a whole life policy, reducing the death benefit. Cathy claimed that Guinn's advice led to the conversion, which was against their best interests. Alan had a 20-year term life insurance policy with a $60,000 death benefit, which he converted to a whole life policy with a $30,000 death benefit shortly before his death.The Sedgwick District Court granted summary judgment in favor of Ozark and Guinn, concluding that Cathy failed to establish a fiduciary duty and that Guinn did not supply false information. Cathy appealed, and the Kansas Court of Appeals affirmed the district court's judgment, agreeing that Cathy did not present sufficient evidence to establish a fiduciary duty or negligent misrepresentation.The Kansas Supreme Court reviewed the case and affirmed the lower courts' decisions. The court held that Cathy failed to establish a fiduciary relationship because there was no evidence that Guinn consciously assumed fiduciary duties. The court also held that Cathy did not present evidence of an affirmative misrepresentation by Guinn, as required for a negligent misrepresentation claim under Restatement (Second) of Torts § 552. The court noted that Cathy's claim was more akin to fraud by silence, which was not pleaded or argued.The Kansas Supreme Court concluded that summary judgment was appropriate because Cathy did not establish genuine issues of material fact for trial on her claims of breach of fiduciary duty and negligent misrepresentation. Consequently, the court affirmed the district court's denial of Cathy's motion to amend her petition to add a claim for punitive damages. View "Stroud v. Ozark Nat'l Life Ins. Co. " on Justia Law

David Levine, former CEO of Geostellar Inc., was accused of defrauding and bankrupting the company. Geostellar had a directors and officers insurance policy from Philadelphia Indemnity Company, which began providing Levine's defense. The policy had a $3 million coverage limit. Levine and his wife later filed for personal bankruptcy, which stayed the Geostellar adversary action. The Geostellar Trustee moved to lift the stay to proceed against Levine to the extent of the insurance coverage, admitting that Levine's debt to Geostellar was uncollectable beyond the insurance coverage.The bankruptcy court granted the motion to lift the stay. The Trustees then filed an adversary action for declaratory judgment, seeking to establish that the right to settlement under the policy was an asset of the Levine Bankruptcy Estate, for which the Levine Trustee was the exclusive representative. The bankruptcy court dismissed the action, and the district court affirmed, finding that neither Trustee had standing to sue the insurer.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision. The court held that the Geostellar Trustee had no standing because West Virginia law did not permit a direct action against the insurer under the circumstances, and the policy only provided coverage to Levine, not Geostellar. The Levine Trustee also lacked standing because any judgment in the Geostellar adversary action would not impact the Levine Bankruptcy Estate, as Levine's debt to Geostellar was discharged and uncollectable beyond the insurance coverage. The court concluded that the right to consent to settlement under the policy was not the property of either Trustee. View "Fluharty v. Philadelphia Indemnity Insurance Co." on Justia Law

Jai Hospitality, LLC (Jai) sued Western World Insurance Company (Western World) after Western World denied Jai's claim for damages from a fire at Jai's motel, arguing that the insurance policy had expired. Jai contended that Western World failed to provide proper notice of nonrenewal or a renewal offer with a premium increase, which should have extended the policy term. Western World argued that it was not required to send notice directly to Jai and that the policy expired on June 1, 2020. Jai obtained replacement insurance in July 2020, after the fire.The District Court of Garvin County initially denied both parties' motions for summary judgment. Upon reconsideration, the court granted Western World's motion, finding that Western World made a timely, legally effective offer to renew the policy and was not required to send the offer directly to Jai. The Court of Civil Appeals affirmed the trial court's judgment, agreeing that notice to Jai's insurance agent constituted notice to Jai.The Supreme Court of the State of Oklahoma reviewed the case and held that the trial court erred in finding that Western World was not required to send its renewal offer directly to Jai. The court determined that the terms of the insurance contract and Oklahoma law required Western World to provide written notice of a renewal offer with a premium increase directly to the first named insured. The court concluded that notice to Jai's insurance agent did not satisfy this requirement. Consequently, the Court of Civil Appeals' opinion was vacated, the District Court's order was reversed, and the matter was remanded for further proceedings. View "Jai Hospitality, LLC v. Western World Insurance Co." on Justia Law

The case involves a dispute over liability-insurance coverage between the plaintiffs, New Hampshire Insurance Company and National Union Fire Insurance Company of Pittsburgh, PA, and the defendants, TSG Ski & Golf, LLC, The Peaks Owners Association, Inc., Peaks Hotel, LLC, and H. Curtis Brunjes. The insurance policies in question included exclusions for personal and advertising injury arising from the publication of material known to be false by the insureds. The underlying lawsuit involved claims that the defendants knowingly published false statements in a debt-collection letter, causing financial and reputational harm to the plaintiffs in that case.The United States District Court for the District of Colorado granted summary judgment in favor of the insurance companies, concluding that the knowledge-of-falsity exclusions in the policies precluded coverage. The court found that the allegations in the underlying complaint fell entirely within the exclusions, and thus, the insurers had no duty to defend or indemnify the defendants. The court also granted summary judgment on the defendants' counterclaims for breach of contract and bad faith, as these claims were contingent on the existence of coverage.The United States Court of Appeals for the Tenth Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the knowledge-of-falsity exclusions applied because the underlying complaint alleged that the defendants knowingly published false statements. The court also found that the evidence at trial established that the defendants knew the statements in the debt-collection letter were false when published, thus precluding indemnity coverage. Consequently, the insurers had no duty to defend or indemnify, and the defendants' counterclaims for breach of contract and bad faith were properly dismissed. View "New Hampshire Insurance Company v. TSG Ski & Golf" on Justia Law

Evanston Insurance Company issued commercial umbrella liability policies to Nooter, LLC, covering the period from July 1, 1981, to July 1, 1985. Evanston sought a declaration in the Eastern District of Missouri that it no longer had a duty to defend or indemnify Nooter in ongoing state court asbestos-related personal injury litigation. Evanston claimed that its policy limits were exhausted as of December 29, 2022, after tendering the remaining available limits to Nooter.Previously, Nooter and Evanston litigated insurance coverage issues in Missouri state court, where it was determined that Evanston had a duty to defend and indemnify Nooter against asbestos exposure claims. The Missouri Court of Appeals affirmed a jury verdict against Evanston for breach of contract and vexatious refusal to pay claims. Nooter filed a motion for contempt in state court, which was denied, but the court noted that Evanston's tender of policy limits did not fulfill its duty to defend.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court's dismissal of Evanston's complaint based on claim preclusion. The court held that Missouri's prohibition on claim splitting applied, as the claims arose from the same contracts and transactions involved in the state court litigation. The court found that Evanston's indemnity and defense obligations had already been decided by Missouri courts, and thus, the federal court lacked jurisdiction over the claims. The court also affirmed the denial of Evanston's motion to amend the complaint and the motion to deposit funds as moot. The dismissal was without prejudice to Evanston's ability to seek relief in state court. View "Evanston Insurance Company v. Nooter, LLC" on Justia Law

Seventeen-year-old Tyler Delonjay was involved in a motor vehicle accident in Jefferson County, Kentucky, in August 2020, resulting in injuries to Jessica Hill and the loss of her pregnancy. Tyler had been in the sole legal custody of his father, Jason Delonjay, for nine years, although he was not physically staying with his father at the time of the accident. Instead, Tyler was staying with his aunt, Suzanne Small, and various friends due to disputes with his father. Tyler's father had an insurance policy with State Farm that provided coverage if Tyler qualified as a "resident relative," defined as one who "resides primarily" with the named insured.The Jefferson Circuit Court granted summary judgment in favor of State Farm, denying coverage, and the Court of Appeals affirmed the decision. The Court of Appeals found the policy language clear and unambiguous, concluding that Tyler was not living at his father's house when the accident occurred, and thus did not qualify as a "resident relative."The Supreme Court of Kentucky reviewed the case and reversed the lower courts' decisions. The Court found that the term "resident relative" was ambiguous, especially considering Tyler's status as a minor and the family court custody orders. The Court noted that Tyler had lived with his father for 97% of the time in the nine years preceding the accident and that legal custody remained with his father. The Court held that ambiguous terms in an insurance policy should be construed in favor of coverage. Consequently, the Supreme Court of Kentucky reversed the summary judgment in favor of State Farm and remanded the case to the trial court to enter summary judgment in favor of Jessica Hill. View "Hill v. State Farm Mutual Automobile Insurance Co." on Justia Law

First Baptist Church, located in Fort Smith, Arkansas, had property insurance policies with Zurich American Insurance Company. The church experienced leaks over the years and hired roofing companies to repair portions of its roofing system in 2016, 2017, and 2018. In 2022, a roofing company representative determined the roofing system had hail damage, and First Baptist filed a claim with Zurich, alleging the damage occurred on April 28, 2017. Zurich denied the claim, citing no damage from the alleged hail event and evidence of excluded causes such as wear and tear. First Baptist sued Zurich for breach of contract and insurance bad faith.The United States District Court for the Western District of Arkansas granted summary judgment in favor of Zurich, concluding that First Baptist failed to comply with the prompt notice provision in the insurance policy. The court based its decision on evidence first discussed in Zurich’s reply brief, which indicated that First Baptist knew of past loss or damage to its property as early as 2016. The court held that no reasonable jury could find that First Baptist promptly notified Zurich of the loss or damage nearly six years later in January 2022. First Baptist filed a motion to reconsider, which the district court denied.The United States Court of Appeals for the Eighth Circuit reviewed the case and concluded that there were potential genuine disputes of material fact not properly litigated. The court noted that First Baptist did not have a fair opportunity to counter Zurich’s evidence and arguments about past leaks and repairs. The court reversed the district court’s grant of summary judgment and remanded the case for further consideration of the issues related to past loss or damage and the effect on First Baptist’s claims. The court also reversed and remanded the grant of summary judgment on First Baptist’s bad faith claim. View "First Baptist Church v. Zurich American Insurance Co." on Justia Law

Jessenia Burton, a student driver, was involved in a car accident during a drivers' education course on April 30, 2017. Burton and her parents sued several defendants, including West Bend Mutual Insurance Company, which provided coverage for the vehicles used in the course. Burton retained neuropsychologist Dr. Daniel Tranel, who conducted an evaluation and diagnosed her with a concussion, postconcussion syndrome, PTSD, and major depressive disorder. Dr. Tranel's report included summaries of psychological and neuropsychological tests administered to Burton.The Iowa District Court for Polk County granted West Bend's motion to compel the production of Dr. Tranel's psychological test material and test data. The court reasoned that since Burton made her mental condition an element of her claim, the information was discoverable under Iowa Code section 228.6(4)(a). The court ordered the information to be produced to West Bend and its attorneys, issuing a protective order to limit further disclosure.The Iowa Supreme Court reviewed the case and reversed the district court's decision. The court held that Iowa Code section 228.9 explicitly prohibits the disclosure of psychological test material and test data in a judicial proceeding to anyone other than a licensed psychologist designated by the individual. The court emphasized that the statute's language is clear and unambiguous, and the only exception to this prohibition is disclosure to another licensed psychologist. The court concluded that the district court erred in granting the motion to compel and vacated the protective order. The case was remanded for further proceedings consistent with this interpretation. View "Burton v. West Bend Mutual Insurance Company" on Justia Law

Francine Pickett sued American Bankers Insurance Company of Florida, American Modern Property and Casualty Insurance Company, Davison Insurance Agency, and various fictitiously named defendants. Pickett alleged that she sought to replace her existing mobile home insurance policy with American Bankers for a lower premium through Davison. She claimed that Davison advised her to purchase a policy from American Modern, which she did. However, American Bankers canceled her previous policy for nonpayment without her knowledge. When her mobile home was damaged by fire, American Modern refused to pay the claim, alleging fraud due to non-disclosure of the previous policy's cancellation. Pickett alleged bad faith, breach of contract, negligent procurement of insurance, civil conspiracy, and negligence against the defendants.The Wilcox Circuit Court denied American Bankers' motion to compel arbitration and stay litigation. American Bankers argued that Pickett had agreed to arbitration through a binder and previous insurance applications. The trial court found that Pickett never received a policy or arbitration agreement in 2022 and thus could not have accepted or rejected the arbitration clause. The court also found that previous policies or arbitration agreements were irrelevant to the current matter.The Supreme Court of Alabama reviewed the case and reversed the trial court's decision. The court held that the binder, which included an arbitration agreement, was a contract that Pickett relied upon for her claims. Therefore, she could not seek the benefits of the binder while avoiding its arbitration provision. The court concluded that Pickett's claims against American Bankers arose from and relied on the binder, making her bound by its terms, including the arbitration agreement. The case was remanded for further proceedings consistent with this opinion. View "American Bankers Insurance Co. of Florida v. Pickett" on Justia Law